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July 10, 2018

Former QVC director embezzled $1M in 'fraud scheme,' sentenced to 30 months in federal prison

James Falkowski funded a luxurious lifestyle otherwise 'beyond his reach,' prosecutors say

Crime and Courts Fraud
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A former QVC executive was sentenced to 30 months in federal prison at a hearing on Tuesday after pleading guilty to 11 charges of wire fraud and one count of conspiracy. 

During his time at the West Chester-based home shopping television network and corporation as a director from 2008 to 2013, James Falkowski, 42, of Buffalo, New York embezzled more than $1 million in money, travel, hotel and resort stays, spa treatments, clothing, Botox injections, car services, luxury accessories and high-end meals, according to court documents.

At a sentencing hearing on Tuesday, a district judge ordered Falkowski also pay $832,138.55 in restitution.

“This defendant used his position, his access, and his employer to fund a lifestyle that would have otherwise been beyond his reach,” said First Assistant U.S. Attorney Williams. “Today’s sentence should serve as a deterrent to anyone who believes he can steal from his employer and successfully cover his tracks.”

As a director, Falkowski was responsible for enhancing the company's brand and reputation in the fashion and entertainment industries. Over the five years he worked there, he apparently expensed "hundreds of thousands of dollars" for reimbursement and embezzled more than $500,000 from a QVC vendor that would issue fraudulent invoices written under his direction.

The expense reports included $100,000 in private luxury chauffeur rides, about $70,000 in payments to his "personal creditors" — which included a $28,000 custom coffee table and credenza for his Philadelphia apartment — and about $60,000 in pre-paid gift cards from American Express, Tom Ford and Barney's New York that he used to pay for clothing and accessories, claiming the items were distributed to talent, according to court documents.

Falkowski caused QVC to hire a Los Angeles-based public relations agency called The Steinberg Group and provided the company with "confidential, proprietary contractual information," court documents said, which allowed it to fraudulently obtain a larger royalty percentage, over a longer period of time, from QVC under a "vendor representative" agreement. This allowed the company to obtain royalties from QVC for product sold on-air. 

The Steinberg Group agreed to pay Falkowski, its silent partner, a 50 percent kickback on all royalty payments. The two parties brought in $312,488.32, which was split two ways.

After he was fired in 2013, Falkowski sent an email to The Steinberg Group's leadership on May 4, 2014, saying, “Let’s be clear ... You have a better deal than any other rep because of me solely. [W]e do not have any contract between us of our deal JUST [The Steinberg Group’s leadership’s] word that we split things 50/50 always. This was because of the complications while I was at QVC."

He also entered a similar fraudulent kickback agreement under a "vendor representative" deal with a New York City-based production management company. He also became a "one-third secret partner," according to court documents. He was awarded $81,571.23 as his share, according to court documents.